Indonesia 2016 | Highlights | Categories and Brands
Banking brands continue to make a strong showing in the Indonesian rankings, accounting for eight brands in the Top 50, and three banks making the Top 5 for the second year in a row. This is a similar proportion of the ranking as is seen in other fast-growth markets in the region, including China and India. Almost all banking brands saw a decline in their brand value in the past year; the slowdown in the global economy, particularly in China, reduced demand for commodities exported from Indonesia, and banks with exposure in this sector were hit hard. With domestic spending down, mortgage demand also slowed.
The Indonesian rankings stand apart from BrandZ™ rankings in other markets for the presence and prominence of tobacco brands. Five of the Top 10 Indonesian brands are tobacco brands, and there is a long history here of smoking regular and traditional kretek cigarettes. This is a big smoking nation, with 72 percent of adult men smoking, though rates among women are low. Unlike most other markets, tobacco brands can still be advertised on television, though there are limitations on what exactly can be shown, and the times of day that cigarette ads can be broadcast. Cigarettes are soon to become more expensive, when the Finance Ministry increases the tax on tobacco in an effort to reduce the rates of smoking.
Fast-moving consumer goods
Economic uncertainty has affected people’s shopping behavior for everyday items, but it has not affected all categories equally. Kantar Worldpanel data shows that the number of shopping trips has declined, perhaps to reduce impulse buying, and the modern trade is most likely to feel the impact of this shift, with some declines seen in smaller stores. Consumption of FMCG products overall declined 1.9 percent in volume terms, but grew 0.7 percent on value. Personal care and home care consumption rose, while hot drinks, bottled water and food generally have seen declines.
Property development and management companies make a strong showing in the rankings for another year, with seven real estate brands in the Indonesian Top 50. This was a difficult year for the sector, partly because of a decreasing propensity to spend but also tighter regulations on property purchases and scrutiny from tax officials on transactions. There is oversupply in the Jakarta office market. A tax amnesty launched by the government in June 2016, which will allow wealthy Indonesians to repatriate money held overseas without being fined for tax evasion, is expected to fuel demand for residential property, particularly in the middle and upper-end of the market.
There are few technology brands in the Indonesian Top 50, something Indonesia has in common with India. Global tech brands on both the hardware and software side operate freely in this market, so there has not been the same impetus as there has been in China to generate home-grown social media, search and e-commerce solutions from scratch. The technology brands that do feature in the rankings are providers of telecommunications services and television. The pay TV market has been highly competitive in the past year, with price wars going on between several rival operators. E-commerce is a thriving area for growth, and while local e-commerce platforms are not yet publicly listed so are not eligible for the BrandZ™ rankings, they are highly influential.